Case Note & Summary
The case involves an appeal filed by M/s Shah Polymers, a partnership firm, against an order of the Company Court dated 4.12.2014 that set aside an ex parte winding up order passed on 19.7.2012 against M/s Canara Polypack Ltd. The appellant had filed Company Petition 191/2009 under Section 433(e) of the Companies Act, 1956, alleging that the company was unable to pay its debts. Notice of the petition was served at the company's Mumbai office, which was deemed sufficient by order dated 25.1.2012. Despite service, the company did not appear, leading to the ex parte winding up order. Subsequently, respondents 2 to 4 (directors of the company) filed applications under Order 9 Rule 13 CPC read with Rules 6 and 9 of the Companies (Court) Rules, 1959, seeking to set aside the winding up order. The Company Court allowed their applications, prompting the present appeal. The High Court of Karnataka, comprising Justices Vineet Saran and B Manohar, allowed the appeal, holding that the directors failed to show sufficient cause for non-appearance. The court noted that service at the registered office was sufficient and the company's non-functioning at that address did not excuse non-appearance. The order setting aside the winding up was set aside, and the ex parte winding up order was restored.
Headnote
A) Civil Procedure - Setting Aside Ex Parte Decree - Order 9 Rule 13 CPC - Sufficient Cause - The court held that the directors of the company failed to show sufficient cause for their non-appearance as notice was served at the registered office of the company in Mumbai, which was deemed sufficient by order dated 25.1.2012. The mere fact that the company was not functioning at that address did not constitute sufficient cause. (Paras 3-5) B) Company Law - Winding Up - Section 433(e) Companies Act, 1956 - Inability to Pay Debts - The winding up petition was filed on the ground that the company was unable to pay its debts due to the appellant. The ex parte winding up order was passed on 19.7.2012 after the company failed to appear despite service. (Paras 2-3) C) Company Law - Appeal Against Order Setting Aside Winding Up - Section 483 Companies Act, 1956 - The appeal was filed under Section 4 of the High Court Act read with Section 483 of the Companies Act, 1956, challenging the order dated 4.12.2014 that set aside the winding up order. The appellate court allowed the appeal, restoring the winding up order. (Paras 1, 6)
Issue of Consideration
Whether the Company Court was justified in setting aside the ex parte winding up order under Order 9 Rule 13 CPC when the directors of the company failed to appear despite service of notice at the registered office.
Final Decision
Appeal allowed. The order dated 4.12.2014 passed by the Company Court in Company Application 21/2014 and Company Application 22/2014 in Company Petition 191/2009 is set aside. The ex parte winding up order dated 19.7.2012 is restored.
Law Points
- Order 9 Rule 13 CPC
- Section 433(e) Companies Act
- 1956
- Section 483 Companies Act
- Rule 6 and 9 Companies (Court) Rules
- 1959
- Sufficient cause for setting aside ex parte decree
- Service of notice at registered office
